The Performance Analysis And Value Creativity Research On Chinese Insurance Companies

Although Chinese commercial insurance industry has been going through many experiences of more than 20 years, the history of contemporary Chinese insurance, compared with developed countries, is still not long, for that Chinese insurance companies are comparatively small not only in numbers but also in scales. Recently, with the rapid development of economy, the industry of insurance is speeding up, too. In fact, the development of insurance relies on the expansion of its operation size, especially on the increase of its insurance income. However, as the joint-stock system reformation of Chinese insurance companies is further carried out, and the proprietorships no longer belong to their countries alone, many insurance companies have come into the market, like Ping'an China, Renshou China, Renbaocaixian, and so on. Therefore, investors have to consider the extension of the companies' scales and the augment of the insurance income, and the performance and value creativity as well. Nowadays in our country, there are few researches about the relationship of the performance and value creativity of insurance companies, and about whether the improvement of the performance indexes based on the maximum value will enhance the value creativity of the companies. In addition, the ways to advance the value creativity of the insurance companies are worth of careful study, too.This article is concerned with the performance and value creativity of Chinese insurance companies on the basis of the maximum value of shareholders. First of all, it demonstrates the relative theories of the companies' performance and value creativity, mostly about the inner relationship of the companies' aim, performance and value creativity. And it explains that the analysis of the companies' performance and value creativity is founded on the aims of the companies. At the same time, it illustrates four methods for analyzing companies' performance and three performance index systems with the assumption that shareholders' value is maximized.Next, it analyzes that the current situation of Chinese insurance corporations. And it argues that the maximum of shareholders' profits is the new trend of the companies' aims. According to this, the companies' performance aims and analysis methods are made, and the internal relationship of the improvement of performance and value creativity is discussed further. At last, the article analyzes the passes to promote our insurance companies, and the most important fact to upgrade the companies' value creativity is to strengthen their administration, while the core of creating shareholders' value is whether the return of investment is above the cost of the capital, and the return stems from the series of administrations from the assessment and selection of the best strategy to the distribution of resources and material analysis of investments.The Empirical analysis carried out in this article is divided into two parts.The first part uses EVA index system to assess the performance of Chinese insurance companies based on the stockholders' value. Nearly all Chinese insurance companies in 2003 and 2004 are taken into this analysis as samples, and the result is that four performance indexes—the ratio of gross assets to income, the ratio of net assets to income, economic added value and unit added value of capital economy—are different in indicating the information of the companies' performance. ROE is not fit to the test of the performance of Chinese insurance companies, while EVA per Capital is better than EVA to assess the performance. The increase of insurance income, relative proportion of fixed assets, the cash account and equivalents and the amount of the cash flows are not the prominent causes that influence the companies' performance, while the scale of Chinese insurance companies acts as a marked factor. The other part utilizes the excess income rate of stock prices as an index of measuring the performance of insurance companies, and demonstratively analyzes the performance and value creativity of Ping'an China, Renshou China and Renbaocaixian with EVA. As for Ping'an China, Renshou China and Renbaocaixian, the improvement of the performance tested by EVA, to some extent, enhances the companies' creativity of the shareholders' profits. So we should strengthen risk management, decrease the companies' non-system risk, improve the decision-making ability of the administrators, and intensify the value creativity of the administrators, so as to give more returns for the stockholders. This passage makes an overall analysis of the performance and value creativity of Chinese insurance company, and it is an unprecedented exploration of this area. However, it is just a beginning, and we hope that it will enrich the research field the performance and value creativity of our Chinese insurance companies.